Whether under 506(d) of the Bankruptcy Code, can a Chapter 7 debtor “strip off” in the entirety, a junior mortgage’s lien if the outstanding debt that is owed to a senior lien-holder is more than the current value of the collateral?

The Court granted certiorari to resolve a circuit split on the issued. The Court held in Dewsnup v. Timm, 502 U.S. 410 (1992) that 11 U.S.C. § 506(d) does not allow a debtor to “strip down” the value of a mortgage lien to the current value. The certified question to be answered by the Court is: Under the Bankruptcy Code, 11 U.S.C § 506(d), can a Chapter 7 debtor “strip off” in the entirety, a junior mortgage’s lien if the outstanding debt that is owed to a senior lienholder is more than the current value of the collateral?